The market sentiment has shifted dramatically from yesterday's despair to today's exuberance. The ChiNext Index, which fell 3% yesterday, surged by 3% today. Hard technology sectors that were collectively weak yesterday have staged a powerful comeback. MLCC, memory chips, PCBs, and optical communications all experienced a strong rebound akin to a deep squat before a jump. A batch of stocks hit their 10% daily limit-up (e.g., Boqian New Materials, Dongcai Technology, Fenghua Advanced Technology, Jin'an Guojie) and 20% daily limit-up (e.g., National Silicon Industry, Xian Yicai-U, Zhengfan Technology, Lihexing). Meanwhile, shares of SK Hynix surged over 16%.
Looking back, understanding the core logic of this technology cycle and the trigger for the recent decline clarifies that such pullbacks are no cause for panic. The storm has passed, and clear skies are ahead.
The Catalyst for the Rebound
The recent market narrative has been relatively clear. The decline in tech stocks was linked to a shift in market faith regarding two key signals: interest rate cuts and sustained high AI growth. The first is market caution ahead of the upcoming Federal Reserve meeting, and the second is the market's negative reaction to some tech leaders' earnings misses.
Despite recent capital divergence, the underlying logic and drivers for hard tech sectors like semiconductors have remained intact. For instance, Intel secured an order for over 3 million TPU chips from Google, sending its stock up over 10%. Additionally, news of easing tensions in the Middle East served as another significant catalyst for the tech stock rebound.
A few days ago, it was noted that the market needed a necessary consolidation after a rapid rise, but a shock in the hard tech sector would not reverse the upward trajectory. Today's rebound also includes a technical oversold component; without yesterday's sharp decline, such a forceful rebound today would be unlikely. Today's leading sectors—composite copper foil, lithography machines, PCBs, MLCC, memory chips, CPO, and advanced packaging—are precisely those that fell the hardest yesterday. Like a spring, the harder it is pressed down, the higher it rebounds.
New Highs and Sector Expansion
Simultaneously, many individual stocks hit new highs, predominantly in hard tech. PCB companies like Jin'an Guojie and Shengyi Technology, and semiconductor material companies like Youyan Silicon reached new peaks. High-priced stock representatives such as Lianxun Instruments and Yuanjie Technology also set new records today.
Beyond long-standing hot themes like semiconductors and optical communications, other sectors are expanding. For example, the humanoid robotics sector saw breakout limit-ups from relatively low-priced stocks (under 50 yuan) like Shiyida, Changhua Group, and Estun. This move is directly related to events like the IPO of Yushu Technology, in which Shiyida holds an indirect stake.
Some of today's leading hard tech sectors have direct or indirect supply chain links to humanoid robotics. For instance, PCBs find applications in joint drives and main control systems. Companies like Pengding Holdings and Shenghong Technology have already established collaborations with leading clients in this field.
External Factor Influencing the Market
The volatility in tech stocks is also tied to the upcoming Federal Reserve policy meeting dynamics. The stronger-than-expected US May non-farm payrolls data recently caused market expectations for Fed rate cuts to cool sharply, while expectations for rate hikes began to surface.
Market reactions show capital is increasingly oscillating between anticipating cuts and fearing hikes. Overall, the current period is within the Fed's rate-cutting cycle that began in September 2024, which has been in sync with the bull market trend.
High US interest rates can lead to capital flowing back to the US, putting some pressure on the A-share market. Conversely, lower rates can induce capital flows into emerging markets, benefiting A-shares. However, the long-term trajectory of the A-share market will ultimately be determined by domestic economic fundamentals and the financial health of listed companies.
Investing is a personal journey with distinct stages. The first stage is seeing the mountain as a mountain, believing the market ultimately has a correct answer. The second is seeing the mountain not as a mountain, realizing the market lacks a single correct answer. The third is seeing the mountain again as a mountain, accepting all the market's uncertainties without needing to explain the mountain itself.
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